The presupposition is that austerity shrinks the economy when it needs to grow the most (not to say profligate spending is a good thing,) and issuing bonds backed partially by the nati0n’s gold reserves would reduce the interest rate they would have to pay. Here is a short video from the WGC introducing the concept:

“Across Europe, economic growth is faltering and in many Eurozone countries, sovereign debt yields are dangerously high. The World Gold Council has been exploring ways that Eurozone Member States could use their gold reserves to help bring down the cost of borrowing. We believe that using a portion of a nation’s gold reserves to back sovereign debt would lower sovereign debt yields and give some of the Eurozone’s most distressed countries time to work on economic reform and recovery.”